Investing in women in India: A tale of two McKinsey reports

Two years ago, McKinsey reported that achieving gender parity in India by 2025 would have a greater economic impact than in any other region in the world.

The report, The Power of Parity: Advancing Women’s Equality in India, estimated that India could add a whopping $700 billion in added GDP in 2025 by, for example, raising women’s participation in India’s labor force by 10 percentage point by 2025. That would usher 68 million more women into the labor force.

If India were to match the momentum toward gender parity of the fastest-improving countries in its region, the country’s annual GDP could grow by 1.4 percentage points.

With an opportunity of that scale, it’s surprising that McKinsey’s recent reporton the growth of impact investing in India, Impact Investing: Purpose-Driven Finance Finds Its Place in India, published last month, makes no mention of gender equity, gender-lens investment, women entrepreneurs or women investors.

The report, which forecasts that the market for impact investments will grow 20 to 24% percent a year and reach $8 billion in 2025, does not even include the word “women.” To be fair, there is an illustration of a woman in a miniskirt watering what looks to be an impact investment tree.

The disconnect leaves out funds like the $15 million SAHA Fund, which “invests in companies that promote gender parity and increase women’s participation in the workforce as employees, leaders and entrepreneurs.”

The Accelerator Group recently launched a $25 million fund and staged an “All India Roadshow on Women’s Economic Empowerment Through Entrepreneurship.” The state of Karnataka has launched a $1.5 million “proof of concept” fund specifically to help female innovators prove out their concepts, get certified and pilot their manufacturing processes.

“There was no deliberate exclusion of ‘gender-lens’ in our work,” Vivek Pandit, co-author of the recent report, told ImpactAlpha. “I suspect the reason it did not find special mention is because we did not find a sufficient number of investments explicitly focused on gender parity, women’s empowerment or female participation rates as the primary measure of their social impact.”

The report suggests growing impact investing by tapping Indian-government-mandated corporate social responsibility funds, developing strong impact fund managers, collecting better data and building new platforms such as social stock exchanges.

Regarding the $700 billion opportunity from the empowerment and inclusion of women, identified by McKinsey itself? Not a word. “You implicitly raise a critical point,” Pandit admits. “There is a woefully insufficient focus on the issue of gender.”

ImpactAlpha’s special report, Women Rising in India, explores how the lives of women are changing — and how women are changing life in India.

• Episode One: Meeting women who are leading India from what’s wrong to what’s working. A journey through rural and urban India finds women are overcoming barriers to build a more resilient and equitable India.
• Episode Two: How women artisans are reviving ancient crafts and rural livelihoods in modern India. Connected to the global market, pottery makers and weavers are raising — and the status of women.
• Episode Three: India’s women farmers are leading from subsistence to regeneration. The feminization of agriculture is bringing higher incomes to rural families.